India’s $8b diamond industry

Chidanand Rajghatta, Times of India’s longtime US correspondent writes that India’s diamond industry is a world leader and draws interesting parallels to its software industry.

India’s diamond industry handles 80 per cent of the global polished diamond market, and earned $8 billion last year (compared to software’s $ 10 billion.) So why do we hear so much about IT and so little about the diamond business? Well, try talking to someone in the diamond industry. It’s like pulling teeth.

India ‘s diamond adventure took off in the 1970s when a small group of intrepid merchants, mostly Jains from Palanpur on the Gujarat-Rajasthan border, began invading the Belgian city of Antwerp , where 90 percent of the world’s uncut diamonds were traded each year.

In time, they would challenge another legendary clan, the Hasidic Jews, who had dominated the trade from the time they arrived from Spain and Portugal in the 1500s.

What took the Hasidim centuries to accomplish was overturned by the Jains in only two decades. They did so using tactics that the software industry replicated some years later.

First, they worked at the bottom end of the spectrum, taking up the smaller uncut diamonds that the Jews ignored as low-value.

Next, they ‘outsourced’ the finishing jobs to India (where incidentally, the diamond industry employs more people than the IT industry), while working their way up the value chain…

The remarkable thing is, like with the software industry, India does not produce much original or branded diamond products. [Times of India]

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